What are we to make of the most recent credit card data?
Over the last year, amounts outstanding increased over 9 percent. Curiously, this number is very close to the recent retail sales data, which recorded a year-on-year increase of 8 percent.
There are a couple of possible explanations. Perhaps all this pessimism about the UK economy is overplayed. Consumers are feeling good and still buying. Alternatively, higher prices are eating into disposible income and people are using the plastic to cover expenditures.
Two further pieces of evidence might help clarify the matter. The average amount per credit card transaction has increased from about ₤67 a year ago to ₤71 this May. In percentage terms, that represents an increase of about 5.8 percent.
The number of credit card transactions are up only marginally, only 1.6 percent.
UK consumers have not increased card usage much, but they are putting on larger amounts everything the plastic leaves the purse.
That sounds a lot like people having to cope with higher prices, rather than a spending splurge.